How to Remove PMI from Your Mortgage: Complete 2026 Guide

If you're paying [private mortgage insurance](/blog/mortgage-insurance-pmi-guide) (PMI), you're likely spending an extra $100 to $300+ per month—money that doesn't build equity or reduce your principal. The good news? PMI isn't forever. Once you meet certain requirements, you can eliminate it and keep that money in your pocket.

This comprehensive guide will show you exactly how to remove PMI from your mortgage, including automatic removal, requesting cancellation, refinancing strategies, and special situations.

What Is PMI and Why Do You Pay It?

Private mortgage insurance (PMI) is insurance that protects your lender—not you—if you default on your mortgage. Lenders require it when you make a down payment of less than 20% on a conventional loan.

Key Facts About PMI:

• Cost: Typically 0.5% to 1.5% of the original loan amount annually
• Payment: Usually added to your monthly mortgage payment
• Purpose: Protects the lender, not you
• Benefit to you: Allows you to buy with less than 20% down
• Duration: Until you reach 20% equity (or 22% for automatic removal)

Example Costs:

Over 5 years at $250/month, you'd pay $15,000 in PMI. That's money you could put toward principal, home improvements, or savings.

When Can You Remove PMI?

Federal law ([Homeowners Protection Act](/blog/what-is-pmi-and-how-to-remove-it) of 1998) gives you the right to cancel PMI under specific circumstances. There are three main timelines:

1. Request Removal at 20% Equity

You can request PMI cancellation when your loan-to-value (LTV) ratio reaches 80% based on the original property value.

Requirements:

• ✅ Reached 80% LTV (20% equity) based on original value
• ✅ Current on mortgage payments (no 30-day late payments in past year)
• ✅ No late payments in past 6 months
• ✅ No subordinate liens (second mortgages, HELOCs)
• ✅ May require new appraisal (lender dependent)

Example: You bought a $400,000 home with 10% down ($40,000)

• Original loan: $360,000
• Current loan balance when you can request removal: $320,000
• Required principal paid: $40,000

2. Automatic Removal at 22% Equity

Lenders are required by law to automatically cancel PMI when your LTV reaches 78% based on the original [amortization schedule](/blog/amortization-schedule-guide), as long as you're current on payments.

Key Points:

• Happens automatically, no request needed
• Based on original payment schedule, not actual payments
• Even if you made extra payments reaching 78% early, automatic removal occurs on the scheduled date
• You must be current on payments

Example: On a 30-year loan, if you never made extra payments, automatic removal would occur when the original amortization schedule shows 78% LTV—typically after 5-8 years depending on your rate.

3. Final Termination at Midpoint

If PMI hasn't been removed by the midpoint of your loan term, it must be automatically terminated regardless of current balance.

Midpoint Examples:

• 30-year loan: 15 years
• 20-year loan: 10 years
• 15-year loan: 7.5 years

Why this matters: If your home hasn't appreciated and you haven't made extra payments, this is your backstop protection.

The 4 Methods to Remove PMI

Let's dive deep into each method for removing PMI:

Method 1: Request Removal Based on Original Value (80% LTV)

This is the most common method and the one most homeowners pursue.

Step-by-Step Process:

Step 1: Calculate Your Current LTV

Formula: (Current Loan Balance ÷ Original Home Value) × 100

Example:

• Original home value: $400,000
• Current loan balance: $315,000
• LTV: ($315,000 ÷ $400,000) × 100 = 78.75%

How to Find Your Current Balance:

• Check your monthly mortgage statement
• Log into your lender's online portal
• Call your lender's customer service

Step 2: Verify You Meet All Requirements

Before requesting removal, confirm:

✅ Payment History

• No payments 30+ days late in the past 12 months
• No late payments at all in the past 6 months
• Check your records or ask your servicer

✅ No Secondary Liens

• No second mortgage
• No [home equity line of credit](/blog/best-heloc-lenders-2026) (HELOC)
• No other loans secured by the property

✅ Good Standing

• No pending foreclosure
• Property taxes current
• [Homeowners insurance](/blog/homeowners-insurance-complete-guide) active

Step 3: Contact Your Lender in Writing

Don't just call—put it in writing. Send a formal letter or email requesting PMI removal.

Sample Letter:

[Your Name]
[Property Address]
[Date]

[Lender Name]
[Lender Address]

Re: Request for PMI Cancellation
Loan Number: [Your Loan Number]
Property Address: [Your Property Address]

Dear [Lender Name],

I am writing to formally request cancellation of private mortgage insurance (PMI) on the above-referenced loan.

My current loan balance is approximately $[amount], which represents [XX]% loan-to-value based on the original purchase price of $[amount]. This exceeds the 20% equity threshold required for PMI cancellation under the Homeowners Protection Act.

I have maintained excellent payment history with no late payments in the past 12 months, and there are no subordinate liens on the property. I am current on all property taxes and maintain adequate homeowners insurance.

Please advise me of any additional steps or documentation required to process this request. If an appraisal is necessary, please provide details on approved appraisers and the process.

I look forward to your prompt response within 30 days as required by law.

Sincerely,
[Your Signature]
[Your Name]
[Contact Phone]
[Contact Email]

Where to Send:

• Check your mortgage statement for the customer service address
• Send via certified mail with return receipt
• Keep copies of all correspondence

Step 4: Complete Required Documentation

Your lender may require:

Common Requirements:

1. Completed PMI Cancellation Form: Each lender has their own form
2. Proof of Property Value: Recent appraisal or broker price opinion (BPO)
3. Payment History Verification: Usually pulled by lender
4. Proof of Insurance: Current homeowners insurance policy
5. Property Tax Verification: Proof you're current

Appraisal Costs:

• Professional appraisal: $400-$600
• Broker Price Opinion (BPO): $75-$150
• Some lenders waive this if you're clearly over 20% equity

Step 5: Wait for Approval

Timeline:

• Lender must respond within 30 days of receiving your complete request
• Total process typically takes 30-60 days
• PMI removal should be effective on the date you reached 80% LTV or your request date, whichever is later

If Denied:

• Lender must provide written explanation
• Common reasons: insufficient equity, late payments, property issues
• You can reapply once you meet requirements

Method 2: Request Removal Based on Current Value (Appreciation)

If your home has appreciated significantly, you might reach 20% equity sooner than the original schedule anticipated.

When This Works:

You bought a $400,000 home 3 years ago with 10% down:

• Original value: $400,000
• Original loan: $360,000
• Current loan balance: $345,000
• Original LTV: 86.25% (not eligible yet)

BUT your home is now worth $480,000 due to market appreciation:

• Current value: $480,000
• Current loan balance: $345,000
• Current LTV: 71.875% (eligible!)

Requirements:

• ✅ Typically need to own the home for at least 2 years
• ✅ Must order professional appraisal at your expense ($400-$600)
• ✅ Home must appraise high enough to show 20%+ equity
• ✅ Some lenders require 25% equity (75% LTV) for appreciation-based removal
• ✅ All standard payment history requirements apply

Process:

1. Research Recent Sales: Look at comparable homes in your neighborhood that sold recently
2. Estimate Current Value: Use Zillow, Redfin, or realtor.com as rough estimates
3. Contact Lender: Ask about their specific policy for appreciation-based PMI removal
4. Order Appraisal: Use lender-approved appraiser
5. Submit Request: Include appraisal with your written request
6. Wait for Decision: Typically 30-45 days

Pro Tip: If your home has clearly appreciated (hot market, major improvements), this can remove PMI years earlier than scheduled.

Method 3: Refinance to a New Loan

If you can't remove PMI through the above methods, or if it makes financial sense for other reasons, refinancing can eliminate PMI.

When Refinancing Makes Sense:

Scenario 1: Rates Have Dropped

• Original rate: 7.0% with PMI
• Current rates: 6.0% without PMI
• You save on both rate AND PMI

Scenario 2: Home Value Increased

• Original value: $400,000, put 5% down ($20,000)
• Original loan: $380,000
• Current value: $450,000
• Current loan balance: $370,000
• New LTV: 82.2% (based on $450,000)

You can't remove PMI on original loan (not at 80% of original value), but you CAN refinance:

• New loan: $370,000
• New value: $450,000
• New LTV: 82.2% → Need to bring $10,000 to closing to reach 80% LTV
• Alternative: Accept slightly higher rate with PMI until you reach 80% naturally

Refinancing Costs to Consider:

• Application fees: $300-$500
• Appraisal: $400-$600
• [Title insurance](/blog/title-search-explained): $1,000-$2,000
• Origination fees: 0-1% of loan amount
• Total closing costs: Typically $3,000-$8,000

Calculate Your Break-Even:

If PMI costs $250/month and refinancing costs $5,000:

• Break-even: $5,000 ÷ $250 = 20 months

If you're also lowering your rate by 0.50%, the monthly savings increase and break-even comes sooner.

Process:

1. Check current mortgage rates
2. Get quotes from 3-5 lenders
3. Calculate total costs vs. PMI savings
4. Choose best offer
5. Apply and close on new loan

Method 4: Make Extra Principal Payments

If you're not quite at 20% equity, accelerating your path there through extra payments can help you remove PMI faster.

Strategies:

One-Time Lump Sum Payment

Make a large payment to immediately jump to 20% equity.

Example:

• Current balance: $335,000
• Original value: $400,000
• Need to reach: $320,000 (80% LTV)
• Lump sum needed: $15,000

Where to Get the Money:

• Tax refund
• Work bonus
• Inheritance
• Savings

Regular Extra Monthly Payments

Add extra principal to each monthly payment.

Example:

• Regular payment: $2,500 (including PMI)
• PMI portion: $250
• Extra principal: $250
• New total payment: $2,750

Result: You're paying the same total amount, but $250 goes to principal instead of PMI. You'll reach 20% equity much faster.

Calculation: Every $250 extra monthly payment reduces your timeline to 80% LTV by approximately 2-3 years on a $400,000 loan.

Annual Extra Payments

Make one extra payment per year (called a "13th payment").

Example:

• Principal & interest payment: $2,250
• Make this payment once extra per year
• Reduces loan by approximately 4-5 years on a 30-year mortgage
• Reaches 80% LTV approximately 1.5-2 years sooner

How to Structure It:

• Divide annual payment by 12, add to monthly payment
• Example: $2,250 ÷ 12 = $187.50 extra per month
• Or make one lump sum payment in December or whenever you have extra cash

Special Situations

FHA Loans: Different PMI Rules

FHA loans have mortgage insurance premium (MIP), not PMI, and the rules are different:

FHA Loans Originated After June 3, 2013:

• If you put down less than 10%: MIP lasts for the entire loan term (30 years)
• If you put down 10% or more: MIP lasts for 11 years
• Cannot be removed early by reaching 20% equity

Only Way to Remove FHA MIP:

1. Refinance to a conventional loan once you reach 20% equity
2. Pay off the loan completely

Why This Matters: If you have an FHA loan with under 10% down, you're stuck with MIP forever unless you refinance. This is a strong argument for refinancing to conventional once you reach 20% equity.

VA Loans: No PMI Ever

VA loans don't require PMI at all, regardless of down payment.

Instead, VA Loans Have:

• Funding fee: One-time upfront fee (1.4%-3.6% depending on down payment and whether first use)
• No monthly mortgage insurance
• Can be rolled into loan amount

If You Currently Have PMI: Consider refinancing to a VA loan if you're eligible (military service member, veteran, or qualifying spouse).

USDA Loans: Different Guarantee Fee Structure

USDA loans have a guarantee fee, not PMI:

• Upfront fee: 1% of loan amount
• Annual fee: 0.35% of loan balance
• Cannot be removed until you refinance or pay off the loan

Piggyback Loans (80-10-10 or 80-15-5)

Some borrowers avoid PMI by using a piggyback loan structure:

• First mortgage: 80% of home value
• Second mortgage: 10-15% of home value
• Down payment: 5-10%

Pros: No PMI Cons: Second mortgage typically has higher interest rate, two monthly payments

Removing the Second Mortgage: Once you build 20% equity, you can refinance into a single loan.

How Much Money Will You Save?

Let's look at real savings from PMI removal:

Example 1: $300,000 Loan

Current Situation:

• Loan balance: $300,000
• PMI: 0.75% annually = $187.50/month
• Annual PMI cost: $2,250

After Removal:

• Monthly savings: $187.50
• Annual savings: $2,250
• 10-year savings: $22,500

Example 2: $450,000 Loan

Current Situation:

• Loan balance: $450,000
• PMI: 1.0% annually = $375/month
• Annual PMI cost: $4,500

After Removal:

• Monthly savings: $375
• Annual savings: $4,500
• 10-year savings: $45,000

That's Not All: The savings continue every month for the life of your loan. Plus, you can redirect that money toward:

• Extra principal payments (pay off loan faster)
• Home improvements (increase property value)
• Investments (build wealth)
• Emergency fund (financial security)

Common Mistakes to Avoid

❌ Mistake 1: Waiting for Automatic Removal

Many homeowners assume PMI will automatically come off at 20% equity. It won't—automatic removal doesn't happen until 22% (78% LTV) based on the original schedule.

Solution: Proactively request removal at 20% equity.

❌ Mistake 2: Not Tracking Your LTV

If you don't monitor your loan-to-value ratio, you might miss the opportunity to remove PMI for months or even years.

Solution: Check your LTV every 6 months. Set a calendar reminder.

❌ Mistake 3: Ignoring Home Appreciation

Your home may have appreciated enough to qualify for PMI removal even though you haven't reached 20% based on original value.

Solution: Monitor your local real estate market. If homes are selling 10%+ above your purchase price, get an appraisal.

❌ Mistake 4: Making Late Payments

Even one payment that's 30 days late can prevent PMI removal for up to a year.

Solution: Set up autopay. Never risk a late payment when you're close to PMI removal eligibility.

❌ Mistake 5: Not Reading Your Loan Documents

Every loan is different. Some have specific PMI removal requirements in the contract.

Solution: Review your original loan documents. Look for PMI-specific language.

❌ Mistake 6: Accepting Lender Delays

Lenders sometimes drag their feet on PMI removal because they benefit from you paying it.

Solution: Know your rights. Federal law requires response within 30 days. Follow up in writing.

Your Action Plan

Follow this checklist to remove PMI:

Month 1: Assessment

• Find your current loan balance
• Find your original home value
• Calculate current LTV
• Review payment history for any late payments
• Check for any secondary liens
• Determine if you meet the 20% equity threshold

Month 2: Research

• Review your original loan documents
• Research recent home sales in your area
• Estimate current home value
• Contact lender to ask about their specific PMI removal process
• Get list of approved appraisers if needed

Month 3: Execute

• Order appraisal if beneficial
• Write formal PMI removal request letter
• Gather required documentation
• Submit complete request via certified mail
• Follow up after 2 weeks

Month 4: Follow Through

• Receive lender decision
• If approved: Verify PMI removed from next statement
• If denied: Address issues and reapply
• Redirect PMI savings toward financial goals

Frequently Asked Questions

Q: Can I remove PMI before 20% equity?

A: No, not under standard circumstances. Federal law requires 20% equity (80% LTV) minimum for borrower-requested removal, with some lenders requiring 25% equity for appreciation-based removal.

Q: How long does PMI removal take?

A: Typically 30-60 days from submitting a complete request. Lenders must respond within 30 days, and PMI should be removed from your next payment after approval.

Q: Will my payment automatically decrease when PMI is removed?

A: Yes. Your monthly payment will decrease by the exact amount of your PMI premium starting the month after approval.

Q: Do I need an appraisal to remove PMI?

A: It depends. If you're at 20% equity based on original value, some lenders don't require one. If you're requesting removal based on appreciation, an appraisal is almost always required.

Q: What if my lender refuses to remove PMI even though I qualify?

A: Send a written complaint to the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov. Also contact your state's attorney general office. Federal law protects your right to PMI removal.

Q: Can I remove PMI on an FHA loan?

A: Not by reaching 20% equity. FHA MIP lasts 11 years (if 10%+ down) or the life of the loan (if less than 10% down). You must refinance to conventional to remove it.

Q: Is the appraisal cost worth it?

A: Usually yes. A $500 appraisal that removes $250/month PMI pays for itself in 2 months. After that, it's all savings.

Q: What happens to my PMI payments after I reach 20% equity but before official removal?

A: Unfortunately, you continue paying until officially removed. However, your removal should be retroactive to your request date if you clearly qualified. Save all documentation.

Q: Can making home improvements help me remove PMI?

A: Yes! Significant improvements (kitchen remodel, addition, etc.) increase home value, potentially bringing you to 20% equity faster. Make sure to get an appraisal to capture the increased value.

Take Control of Your Mortgage Costs

PMI can cost you thousands of dollars per year—money that provides zero benefit to you. By proactively monitoring your loan-to-value ratio, maintaining excellent payment history, and formally requesting removal as soon as you qualify, you can eliminate this expense and redirect those funds toward building wealth and achieving your financial goals.

Don't wait for automatic removal at 22% equity. Take action at 20% and start saving immediately.

Need Help Navigating Your Mortgage?

Whether you're trying to remove PMI, refinance to a better rate, or purchase your first home, the team at HonestCasa is here to help. We'll review your specific situation, calculate your options, and guide you through the process.

Our mortgage experts can help you:

• Determine if you qualify for PMI removal
• Calculate your exact savings
• Navigate the lender request process
• Compare refinancing options
• Find the best mortgage solutions for your needs

Get started today and discover how much you could save by eliminating PMI from your mortgage payment.

Related Articles

• [[Home [Equity Explained](/blog/home-equity-explained)](/blog/what-is-home-equity): What It Is and How to Build It](/blog/home-equity-explained)
• Property Taxes Explained: How They Work and How to Reduce Them
• Amortization Schedule Guide: How Your Mortgage Payment Breakdown Changes Over Time